Is Online Video Industry Dramatically Overfunded?

Interesting opinion article today on the LATimes website titled, "Online video bubble alert." In this post, the author talks about the Advertising 2.0 conference in New York and points out that numerous discussions were formed regarding the opportunity that exists (some would say huge) in the online video industry being that the amount of video consumed on the internet no where matches the money advertisers currently spend on online video advertising. Many believe that there will be a huge shift in dollars moving to the web from traditional media outlets for online video advertising

However, 5 VCs that spoke, presented their opinions that the opportunity is still somewhat slow to be realized. They suggest that the short-term outlook for this shift is perhaps not as positive and that the online video and online social media industries are overfunded. You may have read out post a few weeks back about how $217M was poured into web video startups for Q1 2008 alone.

As Roger Lee, a general partner at Battery Ventures, put it, the online video field is "dramatically overfunded." "Probably 90% of them will disappear in the coming year," he predicted.

Dennis Miller, a general partner at Spark Capital points to advertisers as the reason why this shift may not occur as rapidly as some would hope. As he put it, ""advertisers are lazy." He added that they're reluctant to buy time on sites featuring UGC for fear of running ads next to something inappropriate; yet they don't hesitate to run commercials during the Jerry Springer Show or the Ultimate Fighting Championship. "We're in the very early days, it's very challenging still, but a lot of the onus is on the advertising community to step up, take some chances and stop with the double standard."

Read the rest here

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